The Consequences of the U.S. Baby Bust

My Comments: We’re in the middle of a national re-assessment of who we are as a nation, what we value, and how we want our lives to play out going forward. It’s a stressful time for a lot of reasons.

Our nation today is very, very different from the one found by father and his two siblings when they immigrated to the US. They arrived in Santa Barbara, CA in 1921, from England via New Zealand. Chances are the United States in 2071 is going to be very, very different from the one you and I know today.

One of the forces at work is our attitude toward immigrants. That, coupled with a declining birth rate in this country, is going to have a profound influence. You can like Trump or you can hate him, but he’s an expression of a natural inclination in response to societal pressures. Young people today, and they will soon represent a majority of voters, have markedly different priorities than those of us who have already fought the wars.

By Justin Fox on September 20, 2017

As people in other wealthy countries fretted in the 1990s and 2000s over what falling birthrates would mean for economic growth and retirement-program finances, the U.S. seemed to have far less to worry about. Fertility here remained at or near the replacement rate of 2.1 births per woman over her lifetime, and the country’s long-honed ability to attract immigrants and quickly integrate them into the workforce provided a further economic boost.

Babies are another matter. Over the past decade, the U.S. has joined the ranks of wealthy countries not producing enough of them to keep the population from falling, in the absence of immigration.

This data from the Organization for Economic Cooperation and Development only goes through 2015, but the Centers for Disease Control and Prevention has released provisional numbers for 2016 that show births to be down another 1 percent in the U.S. from the year before. The 3.94 million births last year were the fewest since 1995. As a share of population, the birthrate was the lowest ever.

The decline since 2008 is new enough that experts are still debating whether it’s a blip or a trend. Maybe it’s another of those millennial quirks — like putting off buying a car or moving to the suburbs — that will normalize as the economy continues to improve. The sharpest birthrate declines have been among teenagers, which seems like a positive development. Also, one could argue that population growth and economic growth aren’t so great anyway and we’d be better off with a steady-state economy.

I’m going to stick with the conventional assumptions, though, that economic growth is helpful in resolving societal conflicts, paying for social insurance programs, and generally making people’s lives better, and that population growth is a major driver of economic growth. In that case, the fact that U.S. births have fallen below the replacement rate is significant even if we can’t be sure they’ll stay so low, and worthy of more attention and consideration than it has gotten so far.

For one thing, it adds some useful context to the immigration debate. As I showed in a column last month (and economist Lyman Stone documented in far more detail a few days later), current immigration flows into the U.S. aren’t high by historical standards. But the foreign-born share of the population isn’t far from the peaks of the late 1800s and early 1900s. Why’s that? Mainly because the birthrate is so much lower now than it was then.

So does the recent fall in the birthrate mean that the U.S. needs more immigration, to keep economic growth from slowing even further, or less immigration, to keep the foreign-born share of the population from getting so high that integration is endangered? My natural tendency is to lean toward the former, but I can understand if you disagree. This is a political question, and it seems like the falling birthrate mainly just makes it an even more contentious one.

Getting the birthrate back up, then, might actually help in resolving some of our political debates over immigration. 2 But that’s a lot easier said than done! What got me thinking about this topic was an article by Bloomberg’s Raine Tiessalo about Finland, where fewer babies were born in 2016 than in any year since 1868 — the final year of a great famine that killed 15 percent of the country’s people. Yet Finland does almost everything conceivable to encourage its citizens to have kids. It is the second-best place in the world to be a mother, according to one ranking. It has great schools, ample daycare, generous parental leave, free universities and cheap health care. To top it off, all new mothers get a swell baby box. Writes Tiessalo:
Introduced in 1937, containers full of baby clothes and care products are delivered to expectant mothers, with the cardboard boxes doubling up as a makeshift cot. The idea behind the maternity packages was prompted by concerns over high infant mortality rates in low-income families. The starter kits were eventually extended to all families.

Despite these enticements, the Finns produced just 9.6 babies per 1,000 people in 2016, compared with a rate of 12.2 in the U.S., the 33rd-best place in the world to be a mother. In August, the head of the Finnish Social Democratic Party tried urging women to have more babies as a patriotic duty, and caught flak for that. Designing child-friendly policies is one thing. 3 Changing how people live and think in a free society is a lot harder.